Provident Fund is Taxable- If withdrawn before 5 years of continuous service
Provident fund account becomes non operative if there is no credits or contributions for continuous 36 months & interest will not be credited after that period.
Provident fund is taxable if it is withdrawn without rendering continuous services for five years, though employers can be different. Provident fund’s accumulated amount can be transferred from one firm to another.
For example: If you are working in Firm X for 2 years then you joined Firm Y and you transferred accumulated provident fund amount with Firm X to Firm Y, then it will be treated as continuous service and Provident fund will be considered as non taxable. Please note if you withdraw your amount with Firm X then it will be considered as taxable even if you are having provident fund account with Firm Y.
Withdrawal means discontinuance of service.
So, be cautious while switching job.